The intent and the outcome often differ, especially when it comes to legislation aimed at correcting perceived injustices. Today’s example comes via the Chief Executive of the Women in Super group in Australia. According to Investment Magazine, Sandra Buckley believes increasing the Superannuation Guarantee minimum contribution rate, possibly to 19% of earnings, is essential for women to catch up on their super after time out of the workforce for raising families.
Would that be in the interests of women? The short answer is no. It would disadvantage the very group that Sandra wants to help.
To understand why, Sandra should ask herself where would the extra money come from to make those higher contributions? It does not come from the taxpayer, nor from the employer. It comes from the individual herself. It is a forced wage deferral. There is nothing stopping women, or anyone for that matter, from voluntarily increasing their contributions now. They can do so and defer their income, the result of which would be a larger retirement savings pot. If they can do so now but don’t, that must mean they value take-home pay more highly than an increased superannuation contribution. There are plenty of reasons why that could be the case.
Why does the Women in Super CEO argue that such choice should be removed from women?
Helping Australians build adequate retirement savings is an important objective for policy makers, advocates and practitioners. Attempting to do so by calling for higher compulsory contributions is a lazy option, devoid of imagination and ultimately counterproductive.